KZN225 Msunduzi AFS 2019-20 unaudited

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MSUNDUZI LOCAL MUNICIPALITY
ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
General Information
Legal form of entity Category B Municipality in terms of section 1 of the Local
Government : Municipal Structures Act, 1998 (Act 117 of 1998) read
with section 155(1) of the Constitution of the Republic of South Africa
(Act 108 of 1996) and Municipal Finance Management Act No. 56 of
2003.
Nature of business and principal activities The primary function of Msunduzi Local Municipality is to provide basic
services i.e. water, electricity, sanitation and refuse to the Msunduzi
jurisdiction.
Msunduzi Local Municipality is controlled by a Mayor, Deputy Mayor,
Speaker, Chief Whip, ten Executive Committee members, the
Accounting Officer and five General Managers who contribute to day-
to-day management.
Grading of local authority Category - B
Controlling entity Msunduzi Local Municipality
Economic entity Safe City Msunduzi NPC
Business address The City Hall
260 Church Street
Pietermaritzburg
3201
Postal address The City Hall
Private Bag X321
Pietermaritzburg
3200
Telephone [phone]
Facsimile [phone]
Legislation governing the municipality's operations Municipal Finance Management Act (Act 56 of 2003)
The Constitution of the Republic of South Africa ( Act 108 of 1996)
Municipal Structures Act ( Act 117 of 1998)
Municipal Systems Act ( Act 32 of 2000)
Municipal Property Rates Act (Act 6 of 2004)
Division of Revenue Act (Act 1 of 2007)
Municipal Demarcation Act (Act 27 of 1998)
Bankers First National Bank
Website www.msunduzi.gov.za
Accounting Officer Madoda Phumula Khathide
Auditors The Auditor General of South Africa
Chief Finance Officer (CFO) Nelisiwe Margret Ngcobo
Executive Committee Mayor - Thebolla Mzimkhulu
Deputy Mayor - Inderjit Manilal
Madlala Linda Linford
McArthur Glenn Robert
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Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
General Information
Mkhize Dorcas Sibongile
Ngcobo Zanele
Ngube Gugu Mary - Jane
Ntombela Thinasonke Dennis
Majola Jerome Sibongiseni
Ntshangase Ntuthuko
Councillors Speaker - Majola Nomagugu Eunice
Chief Whip - Ntshangase Michael
Municipal Public Accounts Committee Chairperson - Schalkwyk Mary
Adkins Shawn
Ahmed Najmah Banu
Ahmed Rooksan
Amod Michael
Chonco Sibusiso
Dlamini Ambrosia Sibongile
Dlamini Godman Nkosivelile
Dlamini Sandile Wellington
Dlamini Tholakele Ignetia
Dlela Nomalady Eleanor
Duma Prince Dumisa
Gambu Nkosinathi Chasewell
Goga Mohammed Salim
Gwala Nelisiwe Jannet
Khumalo Nontobeko
Khumalo Sphamandla Dennis
Lambert William Francis
Lyne Sandra Patricia
Madlala Siphamandla Sydney
Madonda Sipho Innocent
Madondo Ignatia Thandiwe
Majola Terrence Sboniso
Mbanjwa Nkosinathi Maxwell
Mhlongo Snothi Raphael
Mkhize Mtuza Bhekithemba
Mkhize Mabhungu
Mncwango Gladness Sibongile
Molefe Thabiso Patrick
Mpulo Mthetho Ephraim
Msimang Prudence Nokuthula
Mtshali Blessing Sbusiso
Naicker Lucky
Naidoo Sunny
Ndawonde Siphiwe Caiphas
Ndlovu Nelisiwe Zanele
Nene Jabulani
Nene S'fiso Derrick
Ngcobo Katherine Malindi
Ngongoma Xolani Ellington
Ngubane Sandile Duncan
Ngubo Jabulisile Joyce
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Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
General Information
Ngubo Manqoba
Ngubo Zinhle Regina
Nhlabathi Bongumusa Cyril
Niemand Rienus
Njilo Mduduzi
Oumar Mehmood-Ul Hassan
Phungula Dumisani Bernard
Reddy Suraya
Sithole Philisiwe
Sithole Thamsanqa Wonderboy
Sivnath Rajdave
Sokhela Balozile Cynthia
Sokhela Mansizwa Simon
Soobiah Rachel
Strachan Ross Bryan
Winterbach Ludwig Johann
Zondi Dolo Phillip
Zondi Hamilton Mlungisi
Zondo Makhosazane Precious
Zuma Bukelani Ephraim
Zuma Michael Bhekabantu
Zuma Thobani
Zungu Ningi Jostinah
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Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Index
Page
Accounting Officer's Responsibilities and Approval 5
Statement of Financial Position 6
Statement of Financial Performance 7
Statement of Changes in Net Assets 8
Cash Flow Statement 9
Statement of Comparison of Budget and Actual Amounts 10 - 14
Accounting Policies 15 - 42
Notes to Annual Financial Statements 43 - 137
Appendices:
Appendix A: Analysis of property, plant and equipment 138 - 141
Appendix B: Analysis of property, plant and equipment 142
Appendix C: Actual versus budget (acquisition of property, plant and equipment) 143
Appendix D: Details of unspent conditional grants transfers to revenue 144
Appendix E : Schedule of contingent liabilities 2019/2020 145 - 158
Abbreviations
ASB A c Acocucnotuinngti nSgt aSntdaanrddasr dBso Barodard
COID C o Cmopmepnesantsioantio fno rf oOrc Ocucpcuaptioantioanl Ianl juInrjiuersi easn adn Ddi sDeiaeseeasses
CPI C o Cnosunmsuemr ePrr iPceri cIen dInedxex
CRR C a Cpaitpailt aRle Rpelapclaecmeemnet nRte Rseesrveerve
DBSA D e Dveevloeplompemnet nBta Bnakn okf oSfo Suothu tAhf rAicfraica
DSB D eDveevloeplompemnet nSt eSrveircveicse Bs oBaordard
FNB F ir Fsti rNsta Ntioantiaoln Bala Bnkank
GRAP G e Gneernaellrya lRlye Rcoegcnoigsneids eAdc Acocucnotuinngti nPgr aPcrtaiccetise
HDF H o Husoiunsgi nDge Dveelvoeplmopemnte Fnut nFdund
IAS I n tIenrtnearntiaotnioanl aAlc Acoccuonutinntgin Sgt aSntadnadrdasrds
IPSAS I n tIenrtnearntiaotnioanl aPlu Pbulibc liSce Scetocrt oArc Accocuonutinntgin Sgt aSntadnadrdasrds
KZN K w aKzwualuz uNlua tNalatal
ME's M u Mniucinpiacilp Eanl tEitnietsities
MFMA M u Mniucnipicailp Failn Fainacnea nMcaen Magaenmageenmt Aecntt Programme
MIG M u Mniucinpiacilp Ianlf rIansfrtarusctrtuucretu Grer aGnrta nt
NATIS N a Ntioantiaoln Tarla Tffriacf fIincf oInrmfoarmtioanti oSny sStyesmtem
NCT N a Ntaal tCalo C-oop-eorpaetirvaeti vTeim Tbimerb Terr eTer eFea rFmairnmgi n(Pg t(yP) tLyt)d Ltd
NJMPF N a tNaal Jtaoli nJto Mintu Mnicuinpiacli pPael nPseionns ioFnu nFdund
NPA N a Ntaal tPiornoaviln Pcrioavl iAndcmiali nAisdtmraitnioisntration
PAYE P a yP aAys AYso uY oEua rEnarn
RMB R a Rnadn Md eMrcehrachnat nBta Bnaknk
UIF U n eUmnepmlopymloeymnte Innts Iunrsaunrcaen cFeu nFdund
VAT V a Vluaelu Aed Addedde Tda Txaatxioantion
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Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Position as at 30 June 2020
Figures in Rand Note(s) 2020 2019
Restated*
Assets
Current Assets
Inventories 3 574 251 013 564 508 437
Short term investment 4 - 15 674 518
Receivables from exchange transactions 5 4 427 291 5 449 597
Receivables from non-exchange transactions 6 2 568 119 2 568 619
Consumer debtors 7 1 980 884 802 1 688 972 901
Cash and cash equivalents 8 517 656 140 305 048 831
3 079 787 365 2 582 222 903
Non-Current Assets
Agricultural assets 9 83 200 000 79 700 000
Heritage assets 10 271 924 972 273 431 260
Intangible assets 11 30 700 413 41 057 963
Investment property 12 821 671 435 779 067 512
Living resources 13 1 070 250 948 425
Property, plant and equipment 14 6 572 843 192 6 640 246 014
Other financial assets 15 - 2 642 997
7 781 410 262 7 817 094 171
Total Assets 10 861 197 627 10 399 317 074
Liabilities
Current Liabilities
Consumer deposits 16 113 838 915 107 229 302
Other financial liabilities 17 113 418 258 114 310 751
Transfers payable (non-exchange) 18 22 991 872 24 448 776
Payables from exchange transactions 19 1 241 249 823 935 326 903
Provisions 20 3 118 321 9 841 144
Employee benefit obligation 21 38 202 000 36 198 896
Unspent conditional grants and receipts 22 180 851 130 103 510 102
VAT payable 23 178 875 064 144 464 969
1 892 545 383 1 475 330 843
Non-Current Liabilities
Other financial liabilities 17 285 317 996 366 291 537
Provisions 20 26 960 329 62 662 384
Employee benefit obligation 21 507 812 001 562 080 514
820 090 326 991 034 435
Total Liabilities 2 712 635 709 2 466 365 278
Net Assets 8 148 561 918 7 932 951 796
Reserves
Accumulated surplus 24 7 959 067 692 7 704 038 538
Capital replacement reserve 25 700 933 40 992 378
Housing development fund 26 93 528 758 90 761 936
Revaluation reserve 27 95 264 535 97 158 944
Total Net Assets 8 148 561 918 7 932 951 796
* See Note 69 & 68
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Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Financial Performance
Figures in Rand Note(s) 2020 2019
Restated*
Revenue
Revenue from exchange transactions
Agency services 28 1 090 372 1 469 372
Interest - consumer debtors and receivables 29 233 529 915 177 231 652
Interest received - bank,call and investment accounts 30 14 116 343 20 378 755
Licences and permits 31 604 456 829 644
Operational revenue 32 47 565 468 55 268 646
Rental of facilities and equipment 33 43 597 286 20 617 910
Rendering of services 34 6 807 908 8 265 686
Sale of goods 35 5 369 103 421 042
Service charges 36 3 104 621 258 2 944 696 529
Total revenue from exchange transactions 3 457 302 109 3 229 179 236
Revenue from non-exchange transactions
Taxation revenue
Property rates 37 1 177 107 606 947 729 117
Interest - property rates 38 70 561 217 58 283 518
Transfer revenue
Fines, penalties and forfeits 39 13 272 582 12 557 144
Government grants and subsidies 40 1 067 241 793 1 004 150 362
Other transfers 41 1 434 881 9 162 557
Total revenue from non-exchange transactions 2 329 618 079 2 031 882 698
Total revenue 5 786 920 188 5 261 061 934
Expenditure
Bulk purchases 42 (2 491 126 597) (2 132 173 417)
General expenses 43 (474 039 478) (570 134 504)
Debt impairment 44 (588 848 799) 510 060 687
Depreciation and amortisation 45 (417 328 682) (454 389 103)
Employee related costs 46 (1 345 305 053) (1 303 016 615)
Finance costs 47 (43 716 970) (52 462 384)
Inventory consumed 48 (58 740 926) (55 935 665)
Operational costs 49 (135 804 334) (123 758 124)
Operating leases 50 (23 792 049) (33 068 023)
Remuneration of councillors 51 (43 759 322) (44 130 681)
Transfers and subsidies 52 (25 306 678) (26 090 875)
Total expenditure (5 647 768 888) (4 285 098 704)
Operating surplus 139 151 300 975 963 230
Actuarial gains/losses 53 91 491 795 162 153 669
Excess in provision liability 20 26 908 554 -
Fair value adjustments on investment property 54 (19 832 000) (32 810 000)
Fair value on agricultural assets and gain on living resources 55 3 621 825 15 856 141
Gains/(losses) on disposal of assets - 2 876 825
Impairment loss 56 (5 553 810) (5 719 754)
Inventory losses 57 (1 676 022) (16 453 277)
94 960 342 125 903 604
Surplus for the year 234 111 642 1 101 866 834
* See Note 69 & 68
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Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Statement of Changes in Net Assets
Revaluation Housing Capital Total reserves Accumulated Total net
reserve development replacement surplus assets
Figures in Rand Fund reserve
Balance at 01 July 2018 51 657 445 87 653 806 92 323 393 231 634 644 6 710 675 028 6 942 309 672
Changes in net assets
Prior year adjustment - - - - (164 994 922) (164 994 922)
Revaluation of heritage assets 45 501 499 - - 45 501 499 - 45 501 499
Cash utilised for capital expenditure - - (65 401 584) (65 401 584) 65 401 584 -
Transfer to CRR - - 12 095 137 12 095 137 (12 095 137) -
Net income (losses) recognised 45 501 499 - (53 306 447) (7 804 948) (111 688 475) (119 493 423)
directly in net assets
Surplus for the year - - - - 1 101 866 834 1 101 866 834
Total recognised income and 45 501 499 - (53 306 447) (7 804 948) 990 178 359 982 373 411
expenses for the 12 months
HDF utilisation - 106 929 - 106 929 - 106 929
Correction in surplus - - - - 8 161 784 8 161 784
Interest earned on investment - 3 001 201 1 975 432 4 976 633 (4 976 633) -
Total changes 45 501 499 3 108 130 (51 331 015) (2 721 386) 993 363 510 990 642 124
Restated* Balance at 01 July 2019 97 158 944 90 761 936 40 992 378 228 913 258 7 704 038 538 7 932 951 796
Changes in net assets
Devaluation of Heritage assets (1 894 409) - - (1 894 409) - (1 894 409)
Cash utilised for capital expenditure - - (40 924 970) (40 924 970) 40 924 970 -
Net income (losses) recognised (1 894 409) - (40 924 970) (42 819 379) 40 924 970 (1 894 409)
directly in net assets
Surplus for the year - - - - 234 111 642 234 111 642
Total recognised income and (1 894 409) - (40 924 970) (42 819 379) 275 036 612 232 217 233
expenses for the year
Correction in surplus - - - - (16 607 111) (16 607 111)
Interest earned on investment - 2 766 822 633 525 3 400 347 (3 400 347) -
Total changes (1 894 409) 2 766 822 (40 291 445) (39 419 032) 255 029 154 215 610 122
Balance at 30 June 2020 95 264 535 93 528 758 700 933 189 494 226 7 959 067 692 8 148 561 918
Note(s) 27 26 25 24
* See Note 69 & 68
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Msunduzi Local Municipality
Annual Financial Statements for the year ended 30 June 2020
Cash Flow Statement
Figures in Rand Note(s) 2020 2019
Restated*
Cash flows from operating activities
Receipts
Sale of goods and services 3 896 388 636 3 600 423 402
Interest income 14 091 556 20 001 043
Interest received - consumer debtors 31 054 794 17 352 420
Government grants 1 169 508 101 1 031 722 607
5 111 043 087 4 669 499 472
Payments
Employee costs (1 332 042 941) (1 284 464 082)
Suppliers (3 056 770 054) (2 951 230 364)
Finance costs (46 314 311) (55 119 340)
(4 435 127 306) (4 290 813 786)
Net cash flows from operating activities 58 675 915 781 378 685 686
Cash flows from investing activities
Purchase of tangible non current assets 14 (396 817 604) (486 845 474)
Proceeds from sale of property, plant and equipment 14 - 3 715 678
Purchase of other intangible assets 11 (97 000) (800 000)
Receipts from other financial assets 166 278 186 254
(Increase)/decrease in short term investment 17 040 365 (6 155 452)
Net cash flows from investing activities (379 707 961) (489 898 994)
Cash flows from financing activities
Repayment of other financial liabilities (83 600 511) (94 966 367)
Net cash flows from financing activities (83 600 511) (94 966 367)
Net increase/(decrease) in cash and cash equivalents 212 607 309 (206 179 675)
Cash and cash equivalents at the beginning of the year 305 048 831 511 228 506
Cash and cash equivalents at the end of the year 8 517 656 140 305 048 831
* See Note 69 & 68
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